Opinion: Gambling Bill confusion needs to be addressed
As the Gambling Bill passes from the House of Commons to the House of Lords this week, leading gaming lawyer and Harris Hagan partner Julian Harris (pictured) takes a look some of the issues the government and regulator still need to resolve.
The Gambling (Licensing and Advertising) Bill arrives at the House of Lords today (17 December), but it cannot now complete the Parliamentary process before the recess. This means that it will not receive Royal Assent until at least January.
The Commission were anticipating a start date for applications of 1 April, but this cannot now be achieved, as the Bill cannot come into force by convention until two months after Royal Assent. The start date is likely to be 1 May, or 1 June.
I do not envisage any substantial amendments to the Bill in the House of Lords although there remain some unresolved issues for the Gambling Commission to address, including:
1. Clarification is needed as to whether both parties to a “white label” agreement will require licensing. It can be argued that a company which provides its brand to and advertises a gambling site operated by a third party constitutes an invitation to gamble in accordance with arrangements made by that company. We do not believe that this should require a licence, but the Gambling Commission has yet to make a decision.
2. The Gambling Commission has indicated that in the case of “business to business” operations as well as “business to customer” operations, both parties would require a full remote gambling operating licence. However, the Commission have said that compliance with the licence conditions, codes of practice and technical standards could be “carved up” between the two. It remains to be seen how this will work in practice.
3. The Government has recommended that the customer’s usual place of residence will govern whether remote gambling duty is payable. The basis for licensing is still subject to debate, but the Commission believes all those physically present in the UK, whether resident or visitor, should have the protection awarded by gambling with a licensed operator. As it stands, the requirement for a licence will be based upon the location of the customer, whereas the requirement to pay tax will be based upon the usual residence of the customer.
4. On the proposed timetable, operators would have a short time frame to bring their procedures, software and equipment in line with UK requirements once the Bill receives Royal Assent. The Gambling Commission has made a concession here and stated (informally) that it intends to implement a further transitional period for new licensees to bring all their software and equipment in line with UK technical standards.
5. The Gambling Commission intends to introduce a new licence condition to the effect that all companies providing gambling software to a UK licensee will themselves require a software operating licence. However, it is not clear how far down the supply chain the licence requirement goes and we are hoping for clarification from the Commission.
As this is a proposed licence condition, rather than a requirement of the 2005 Act itself, the requirement for such software suppliers to hold a UK software operating licence will not kick in until the Commission’s proposed changes to the LCCP take effect, which we anticipate in the second half of 2014. The Commission has indicated that it does not propose to bring in the new LCCP until after the licence requirement has come into force and all transitional applications have been dealt with.
All new UK licensees will become subject to the provisions of the Gambling Act 2005, its regulations and the Gambling Commission’s social responsibility and technical standards requirements. In this regard, operators who are beginning their research now should note that the Commission is currently consulting on significant changes to the Licence Conditions and Codes of Practice, which are intended to come into effect at some point in 2014.
Operators will need to implement new operating policies and procedures as well as have software and equipment re-tested against the UK standards. Depending on the demands of an operator’s current regulatory regime, the cost of compliance may be high.
Operators will also be required to contribute towards British problem gambling and regulatory costs. It is not therefore simply a question of making an application, and we are not sure that many operators have yet appreciated quite how much work is involved overall in the process.
Considering the Bill’s compatibility with EU law, the European Union Committee stated that “although we cannot rule out the possibility that a disgruntled remote gambling operator or association might try to bring a case against the UK in the European Court of Justice, we are satisfied that the Government has considered the compatibility of the proposed legislation with EU Law and we note its confidence that any challenge to the legislation would be unlikely to succeed”.
The European Committee received a formal complaint regarding the Bill from Malta, but ultimately raised no criticism of it. There remains the possibility of a challenge from operators, such as those in Gibraltar, but doubt as to whether any such challenge would in fact derail, or even delay, implementation of the new Bill.